EX-99 7 exh993.txt EXHIBIT 99.3 Exhibit 99.3 ------------ EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (Dollars in thousands) Management has prepared the following unaudited consolidated pro forma financial statements which are based on the historical consolidated financial statements of Equity One, Inc. and subsidiaries (the "Company") and adjusted to give effect to the acquisitions of Sheridan Plaza, Butler Creek, Presidential Markets, Bandera Outparcel, and HEB-Spring Shadows (the "Acquired Properties") and IRT Property Company ("IRT"). The unaudited consolidated pro forma balance sheet at June 30, 2003 has been prepared to reflect the subsequent acquisition of the Acquired Properties as if the acquisitions had occurred on June 30, 2003. The unaudited consolidated pro forma statements of operations for the year ended December 31, 2002 and the six months ended June 30, 2003 have been prepared to present the results of operations of the Company as if the subsequent acquisition of the Acquired Properties had occurred at the beginning of the periods presented. On February 12, 2003, the Company completed a statutory merger with IRT. As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10 million square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the periods presented. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. The unaudited consolidated pro forma financial statements neither purport to represent what the consolidated results of operations actually would have been had the Acquired Properties, IRT and related transactions occurred at the beginning of the periods presented, nor does it purport to project the consolidated operations for any future period. The following unaudited consolidated pro forma financial statements should be read in conjunction with the 2002 Consolidated Financial Statements and the Notes thereto that are included in the Company's Current Report on Form 8-K dated September 19, 2003, the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2003, the 2002 Consolidated Financial Statements and the Notes thereto of IRT that are included in the Company's Current Report on Form 8-K dated May 13, 2003, and the Statement of Revenues and Certain Operating Expenses and related Notes thereto included elsewhere in this Form 8-K. In the Company's opinion, all significant adjustments necessary to reflect the effects of the Acquired Properties and IRT have been made. 1 Exhibit 99.3 ------------ EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF JUNE 30, 2003 (In thousands)
Pro Forma Historical Adjustments Pro Forma (A) (B) Consolidated --------------- ------------- --------------- ASSETS PROPERTIES: Income producing....................................................$ 1,414,908 $ 138,542 $ 1,553,450 Less: accumulated depreciation...................................... (52,059) - (52,059) --------------- -------------- -------------- 1,362,849 138,542 1,501,391 Construction in progress and land held for development.............. 42,104 - 42,104 Properties held for sale............................................ 1,210 - 1,210 --------------- ------------- -------------- Properties, net.................................................. 1,406,163 138,542 1,544,705 CASH AND CASH EQUIVALENTS.............................................. 2,119 - 2,119 CASH HELD IN ESCROW.................................................... 3,381 - 3,381 ACCOUNTS AND OTHER RECEIVABLES, NET.................................... 11,964 - 11,964 INVESTMENTS IN AND ADVANCES TO JOINT VENTURES.......................... 8,503 - 8,503 GOODWILL .............................................................. 22,535 - 22,535 OTHER ASSETS........................................................... 27,841 - 27,841 --------------- ------------- -------------- TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048 =============== ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: NOTES PAYABLE Mortgage notes payable..............................................$ 420,265 $ 27,502 $ 447,767 Revolving credit facilities......................................... 98,931 106,724 205,655 Unsecured senior notes payable...................................... 150,000 - 150,000 --------------- ------------- -------------- 669,196 134,226 803,422 Unamortized premium on notes payable................................... 20,945 3,181 24,126 --------------- ------------- -------------- Total notes payable............................................. 690,141 137,407 827,548 --------------- ------------- -------------- OTHER LIABILITIES Accounts payable and accrued expenses............................... 25,416 864 26,280 Tenant security deposits............................................ 6,678 271 6,949 Other liabilities................................................... 2,895 - 2,895 --------------- ------------- -------------- Total liabilities................................................ 725,130 138,542 863,672 --------------- ------------- -------------- MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES......................... 15,763 - 15,763 --------------- ------------- -------------- COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' EQUITY: Preferred stock, $0.01 par value - 10,000 shares authorized but unissued............................................................ Common stock, $0.01 par value - 100,000 shares authorized, 63,517 shares issued and outstanding.................................... 635 - 635 Additional paid-in capital.......................................... 749,327 - 749,327 Retained earnings................................................... 1,451 - 1,451 Accumulated other comprehensive gain................................ 1 - 1 Unamortized restricted stock compensation........................... (6,194) - (6,194) Notes receivable from issuance of common stock...................... (3,607) - (3,607) --------------- ------------- -------------- Total stockholders' equity....................................... 741,613 - 741,613 --------------- ------------- -------------- TOTAL..................................................................$ 1,482,506 $ 138,542 $ 1,621,048 =============== ============= ==============
2 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET AS OF JUNE 30, 2003 (In thousands) A) Reflects the Company's unaudited historical consolidated balance sheet as of June 30, 2003. The historical balance sheet for the Company includes IRT and HEB - Spring Shadows. B) Represents management's estimate of the allocation of the Company's aggregate purchase price and closing costs for the acquisitions of the Acquired Properties, excluding HEB - Spring Shadows, totaling $138,542. Based on management's preliminary analysis, no significant assets or liabilities related to above or below market leases were acquired in connection with the Acquired Properties. Represents assumption of a mortgage note of $27,502 related to Presidential Markets, bearing a fixed interest rate of 7.65%, maturing in 2011. There is a premium on the note of $3,181, to be amortized over the remaining life of the loan. Also, represents other liabilities assumed on the acquisition of the properties and additional borrowings on the Company's revolving credit facility of $106,724. 3 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands except per share amounts)
IRT Pro Forma Acquired Pro Forma Historical Adjustments Properties Consolidated (A) (B) (C) (D) -------------- --------------- --------------- --------------- RENTAL INCOME: Minimum rental.............................. $ 66,602 $ 8,371 $ 5,431 $ 80,404 Expense recoveries.......................... 18,599 2,037 1,458 22,094 Termination fees............................ 497 - - 497 Percentage rent payments.................... 1,476 77 283 1,836 -------------- --------------- --------------- --------------- Total rental revenue..................... 87,174 10,485 7,172 104,831 INVESTMENT INCOME............................... 874 - - 874 OTHER INCOME.................................... 90 - 9 99 -------------- --------------- --------------- --------------- Total revenues............................ 88,138 10,485 7,181 105,804 -------------- --------------- --------------- --------------- COSTS AND EXPENSES: Property operating expenses.................. 24,360 2,945 2,209 29,514 Interest expense............................. 18,307 3,158 2,326 23,791 Amortization of deferred financing fees...... 595 - - 595 Rental property depreciation and amortization................................. 12,099 1,741 940 14,780 General and administrative expenses.......... 5,520 189 - 5,709 -------------- --------------- --------------- --------------- Total costs and expenses.................. 60,881 8,033 5,475 74,389 -------------- --------------- --------------- --------------- INCOME BEFORE EQUITY IN INCOME OF JOINT VENTURES, LOSS ON EXTINGUISHMENT OF DEBT, AND MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.................................. 27,257 2,452 1,706 31,415 EQUITY IN INCOME OF JOINT VENTURES............... 260 - - 260 LOSS ON EXTINGUISHMENT OF DEBT................... (623) - - (623) -------------- --------------- --------------- --------------- INCOME BEFORE MINORITY INTEREST IN EARNINGS OF CONSOLIDATED SUBSIDIARIES..................... 26,894 2,452 1,706 31,052 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES.. (379) (92) - (471) -------------- --------------- --------------- --------------- INCOME FROM CONTINUING OPERATIONS............... $ 26,515 $ 2,360 $ 1,706 $ 30,581 ============== =============== =============== =============== EARNINGS PER SHARE: BASIC EARNINGS PER SHARE Income from continuing operations............ $ 0.49 $ 0.51 ============== =============== NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE............................ 54,080 5,796 59,876 ============== =============== =============== DILUTED EARNINGS PER SHARE Income from continuing operations............ $ 0.48 $ 0.50 ============== =============== NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE........................... 55,671 5,971 61,642 ============== =============== ===============
4 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (In thousands except per share amounts) A) Represents the Company's unaudited historical consolidated statement of operations for the six months ended June 30, 2003, including the results of operations for IRT for the period February 12, 2003 to June 30, 2003 and HEB - Spring Shadows from April 3, 2003 to June 30, 2003. B) On February 12, 2003, the Company completed a statutory merger with IRT Property Company ("IRT"). As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10,041 square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the period. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. C) Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the six months ended June 30, 2003 (excluding the operations included in the historical results of the Company), including the following pro forma adjustments detailed below: (1) Depreciation and amortization expenses totaling $940 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. (2) Additional interest expense totaling $1,265, assumes the borrowing of $106,724 on the revolving credit facility at a rate of 2.71% (the Company's effective borrowing rate for the period) and amortization of interest premium relating to the assumption of a mortgage note on purchase of Presidential Markets. D) Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share as well as the pro forma weighted average shares outstanding for the six months ended June 30, 2003. 5
IRT Pro Forma Acquired Pro Forma Historical Adjustments Properties Consolidated (A) (B) (C) (D) -------------- -------------- ------------- ------------- RENTAL INCOME: Minimum rental.............................. $ 72,536 $ 71,044 $ 10,761 $ 154,341 Expense recoveries.......................... 22,983 17,126 2,791 42,900 Termination fees............................ 2,235 1,172 - 3,407 Percentage rent payments.................... 1,507 783 49 2,339 -------------- -------------- ------------- ------------- Total rental revenue...................... 99,261 90,125 13,601 202,987 INVESTMENT INCOME............................... 1,632 413 - 2,045 OTHER INCOME.................................... 1,085 - 88 1,173 -------------- -------------- ------------- ------------- Total revenues............................ 101,978 90,538 13,689 206,205 -------------- -------------- ------------- ------------- COSTS AND EXPENSES: Property operating expenses.................. 30,023 23,486 4,115 57,624 Interest expense............................. 22,368 21,890 5,546 49,804 Amortization of deferred financing fees...... 884 1,130 - 2,014 Rental property depreciation and amortization................................. 13,533 11,551 1,907 26,991 Litigation settlement........................ 2,067 - - 2,067 General and administrative expenses.......... 6,649 4,199 - 10,848 -------------- -------------- ------------- ------------- Total costs and expenses................ 75,524 62,256 11,568 149,348 -------------- -------------- ------------- ------------- INCOME BEFORE EQUITY IN INCOME OF JOINT VENTURES, LOSS ON EXTINGUISHMENT OF DEBT, GAIN ON SALE OF PROPERTIES AND OUTPARCEL, AND MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES................................. 26,454 28,282 2,121 56,857 EQUITY IN INCOME OF JOINT VENTURES.............. 549 - - 549 GAIN (LOSS) ON EXTINGUISHMENT OF DEBT........... 1,520 (156) - 1,364 GAIN ON SALE OF PROPERTIES AND OUTPARCEL........ - 1,101 - 1,101 -------------- -------------- ------------- ------------- INCOME BEFORE MINORITY INTEREST IN EARNINGS OF CONSOLIDATED SUBSIDIARIES.................... 28,523 29,227 2,121 59,871 MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES. (101) (559) - (660) -------------- -------------- ------------- ------------- INCOME FROM CONTINUING OPERATIONS............... $ 28,422 $ 28,668 $ 2,121 $ 59,211 ============== ============== ============= ============= EARNINGS PER SHARE: BASIC EARNINGS PER SHARE Income from continuing operations............ $ 0.87 $ 1.04 ============== ============= NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE............................ 32,662 24,401 57,063 ============== ============== ============= DILUTED EARNINGS PER SHARE Income from continuing operations............ $ 0.86 $ 1.02 ============== ============= NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE 33,443 25,426 58,869 ============== ============== =============
6 EQUITY ONE, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2002 (In thousands except per share amounts) A) Represents the Company's unaudited historical consolidated statement of operations for the year ended December 31, 2002. B) On February 12, 2003, the Company completed a statutory merger with IRT Property Company ("IRT"). As a result of the merger, the Company acquired 93 properties that comprise an aggregate of approximately 10,041 square feet of gross leasable area. The IRT pro forma adjustment is presented to reflect the effects of the IRT acquisitions and related transactions, and the impact on the Company's results, as if the transactions had occurred at the beginning of the period. The pro forma information includes the acquisition of IRT, the issuance of common stock related to the IRT transaction, the private placement of common stock and the borrowing under the revolving credit facility. C) Represents the unaudited statement of revenues and certain operating expenses for the Acquired Properties for the year ended December 31, 2002, including the following pro forma adjustments detailed below: (1) Depreciation and amortization expenses totaling $1,907 based on the allocation of the purchase price and closing costs to building and improvements based on estimated useful lives of 40 years. (2) Additional interest expense totaling $3,392, assumes the borrowing of $106,724 on the revolving credit facility at a rate of 3.51% (the Company's effective borrowing rate for the period) and amortization of interest premium relating to the assumption of a mortgage note on the purchase of Presidential Markets. D) Represents the Company's consolidated pro forma statement of operations including pro forma basic and diluted earnings per share as well as the pro forma weighted average shares outstanding for the year ended December 31, 2002. 7